The Association of British Insurers says it is a “myth” that pension charges are putting people off saving for retirement.
Providers have been subjected to a barrage of criticism over the impact charges have on the value of peoples’ pension pots.
Speaking at the ABI pensions conference in London today, ABI director of life, savings and protection Stephen Gay said: “It is a myth that pension charges put people off saving for retirement. Of the people we surveyed, only 4 per cent said their biggest concern about pensions was management charges.
“If you look at the facts, charges for contract pensions have been heading south for a decade and they are lower than Isas. In fact they are lower than ever before.
“We looked at 95 per cent of the pensions market, covering the default funds of over 100,000 schemes. The best have lower charges than Nest or Now Pensions and the average modern scheme has charges of just 0.52 per cent.”
Aviva UK Life chief executive David Barral said: “Our average annual management charge for a group personal pension scheme is 0.6 per cent, so we would argue that the market is incredibly transparent and fiercely competitive.
“If our product or our service is not good enough, advisers are incredibly quick to punish us.”
However, pensions minister Steve Webb said high charges remain a cause of concern for the Government.
He said: “If you take out a stakeholder pension and you are on a low wage and make intermittent contributions, charges can be 20 per cent of your pension pot. That is a big number. Charges are still an important factor and I certainly would not dismiss the issue.”